Stand by for mortgage hikes – could the first be in November?

If you’ve got a loan or a mortgage, you need to face up to the fact that interests rates are going to rise. In the words of the Prime Minister Malcolm Turnbull: “Not immediately but soon”.

That means mortgage rates may hit 7.25 per cent, adding close to $5000 in annual repayments to a $300,000 loan.

Chances of a rate hike in May next year leapt to 91 per cent from 52 per cent prior to the release of minutes of a Reserve Bank meeting at which they discussed a 3.5% interest rate as “the new norm”.

The current rate is 1.5 per cent .

This morning came a few caveats. The Australian Financial Review suggested it might have been a “false alarm”. But here were no denials and Mr Turnbull’s comments point to a concerted effort to pave the way for rises.

“My guess is they’re preparing the market for a series of quarter-point rate hikes,” former Reserve Bank board member Warwick McKibbin told The Financial Review.

“The bottom line is that I don’t think the bank wants to fall behind the curve with the US hiking, and nominal growth high and rising.”

Goldman Sachs Australia chief economist Andrew Boak said in an interview in The Australian Financial Review that the first hike would happen on Melbourne Cup Day in November, as the Reserve Bank joined other central banks in starting the process of removing emergency low monetary policy settings.

How rental units now cost the same as a house

It all comes as it was revealed that it now costs as much to rent an apartment in Sydney as it does a house. The median cost for both is now $550 a week.

According to Domain, Sydney unit rents jumped $20 a week over the June quarter. So much for a glut in apartments caused by the building boom.

Australia – a great place to retire

But there was some good news this week. Australia is the sixth-most attractive country in the world for retirement, thanks to the nation’s world-class superannuation system.

French asset management giant Natixis’ Global Retirement Index found Norway, Switzerland and Iceland remained the three most attractive countries for retirement globally.

But Australia scored highly for its quality of life and its relatively low level of government indebtedness.

And more good news for those with big super balances.

Chant West found Australian superannuation funds posted their eighth consecutive year of growth last year.

The median super fund growth was up 10.7 per cent in the 2017 financial year, the highest return since median growth of 12.8 per cent in financial 2014.

Bottoms up

It’s got high liquidity and a big return. But, as The Australian’s James Gerrard reported recently, investing in single malt whisky allows you to mix business and pleasure – literally.

He quotes Ivan Myers, co-owner of World of Whisky in Sydney — the only dedicated whisky shop in Australia — as saying: “Whisky is not dissimilar to other investments; you need to do your research, understand the risks and balance this against the potential gains.”

Myers recommends new investors go to a tasting session to “get an understanding on why whisky tastes the way it does. At minimum, most gain a greater appreciation of the amber liquid. For others, they connect and it starts to become a part of their life”.

Are you beginning to worry these enthusiasts are a little too close to their subject?

Alex Chlebnikowski , manager at Nicks in Melbourne, says it’s all about supply and demand.

Chlebnikowski says “today there is a renewed demand for fine single malt whisky from the younger demographic. We’re seeing 25-year-olds buying fine whisky — not just elderly gentlemen as you might traditionally think.”

It may come as a surprise that some of the most expensive whisky brand now come from Japan.Yamazaki has increased from $300 up to $800 for their trademark 18-year-old whisky.

Gerrard’s tips:

– Buy whisky with an age statement on the bottle and packaging.

– Look out for single cask whisky . With the typical cask being 100 to 200 litre capacity, production runs are limited to 200 to 400 bottles of whisky.

– Whisky from so-called ‘‘dead soldiers’’ is worth looking at. This is an industry term used to describe whisky distilleries that have ceased new production but are still bottling as their reserves mature. In 2105, first edition Yamazaki 50 Year Old Single Malt was sold for a remarkable US$129,000, making it the most expensive bottle of whiskey in the world.

– Keep an eye on industry awards. Whisky that wins a World of Whisky or Jim Murray award can rocket in value. For example, Yamazaki Single Malt Sherry Cask originally sold for $600 per bottle. After winning the accolade of ‘‘ world whisky of the year’’ in Jim Murray’s whisky bible, the prices shot up to over $3000.

Sign up for our newsletter

Email address:

First Name:

Last Name:

Leave this field empty if you're human:

MAKE SURE THIS IS SUITABLE FOR YOU

The information available on this site is intended as general advice only. It is not personal advice and must not be relied upon as such. Really Simple Money Pty Ltd does not make any representation or warranty, express or implied, as to its accuracy, timeliness or completeness. The circumstances and investment objectives of individual users have not been taken into account in the preparation of material on this website.
You should make you own enquiries before making any investment decisions. Really Simple Money Pty Ltd and its related bodies or corporate, and their directors and employees, do not accept any responsibility arising in any way (including negligence) for errors in, omission from, or reliance one, the information provided on this website.